Of all the apps on Facebook, here is one that might actually make you money—depending on how smart your friends are. Cake Financial, a social finance site that lets you track and share the performance of your actual brokerage accounts, just launched its Facebook app. The app lets you compare your real stock-picking prowess to that of other Facebook members who install it on their profile pages. These are not fantasy portfolios. They show your actual returns in percentage terms (no dollar amounts are revealed), and let you compare your returns with that of your friends across brokerage accounts. Every time you or a friend makes a trade, it shows up in your feed. Talk about timely information.
Cake Financial launched at the TechCrunch40 conference last year. Since then, nearly 10,000 members have signed up who track portfolios collectively worth about $1 billion. CEO Steve Carpenter hopes that Facebook will help Cake Financial grow faster.
The potential power behind Cake—as with other social finance sites like Covester, SocialPicks, and Motley Fool CAPS—is the ability to follow the best stock pickers no matter who they are (amateur or pro). Carpenter has plans to create exchange-traded funds (ETFs) that mimic the portfolios of each of the top five percent members on Cake. It would be a personal ETF. He is still working through the details. But imagine if one of your friends on Facebook was in that elite group and you could automatically start trading alongside him. Would you do it?
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Is this trend over yet? Please, someone quickly page that annoying Stanford kid, we need his brilliant insight on spamming, fake commenting, and other illuminating theories..
And Mike, I took a dump in the sink while I was at the TC40 party. Based on the number of Facebook fans of that acid-processed quesadilla and the fact that it debuted at TC40, do I get a writeup too?
Useless. If I were that good in picking stocks, I wouldn’t be wasting my time looking at this site!
What a waste of time…
Never ever try to beat the market - everyone fails sooner or later.
Today’s champions are tomorrow’s losers.
Only some hedge fund managers beat the market 20-30 years in a row, but they employ exotic strategies, which are far from “brokerage portfolios” and whose funds are not for the average Joe.
Do something real instead and don’t be the sitting duck for the wise Wall Street cowboys.
If you take it as entertainment though - it’s a nice form of it.
The info is wrong…
Covestor has more than $3.5M in the bank - raised from Angels and strategic partner - they announce that a while back…
Cake just closed A round ~$2.5M - $4M from Bay Partners and leading Angel investors.
CakeFinancial got much more than $4M to date
stupid sites
I tend to agree with the aforementioned comments. From my experience, for what its worth, once a fund becomes hot it tends to under perform. Think about it when everyone is swarming the smart money gets out and the masses lose. My guess is that ETFs based on the best performers will likely perform the same way.
well thats great but i feel facebook is like one big ad space for companies that make all these facebook apps that in the long run are designed to sell you something.
Reminds me of http://www.Vestopia.com. Have you heard of them?
this is actually the stupidest thing i’ve ever seen… and i try to reserve statements like that… but this, genuinely, couldn’t be any more ignorant to the wants and needs of their intended market… just how stupid do they think people are?
Matt - so what are the wants and needs of their intended market that they’re ignoring?
Dividend.com is the most basic and simplest site on the web. It’s about results that you can understand. The site is a throwback to the days you don’t need star wars-like software programs to succeed. Discipline and planning is how to make it as a trader. The dividend stocks section is gold for long-term investors. There isn’t a much better return than dividend stocks where the dividends are re-invested over time. Keep it simple and you will succeed.
This idea actually has much more merit than most of the “wisdom of the crowds” stock-picking sites out there. After all, the actual stock market is already the best aggregating mechanism of collective wisdom and creating another market to predict stock markets is rather silly.
Hi,
My name is Johnny Rip and I work for the IRS. Thanks for the tip, pals.
It’s a cool app, but is this really necessary for a site like facebook?
If my friends are like me, they probably don’t want everyone to know just how much money this bear market has cost my portfolio. It would be one thing if the market was racing to new highs, making everyone look like a genius. But I don’t think I’d want everyone in the world to watch as my portfolio falls with the market indexes.
Cake Financial is a cool application which has been well executed. When was the last time you had a useful discussion about a stock on Yahoo! Finance. Errr, like never.
On Cake you can see people’s positions so there is full disclosure and it also separates the bullsh*tters from the real investors.
I don’t think they need to do a Facebook app though. It was probably in their term sheet…
(I just wish I got a magic dollar every time some one suggested we do a Facebook app. Then would wouldn’t have to raise any more finance
@MikeT
I sense you may have lost big on stocks and are slightly, well, bitter. Just because you picked bad stocks, doesnt mean everyone else will.
Looks like a good app for the newbie investor as well as another tool for the more advanced user. Might just give it a go.
If paid professionals can’t reliably predict the market/stocks other than diversify and invest for the long term, how much hope is there for amateurs? Sure there will always be periods of good return but chasing after those portfolios is like chasing after high-performing actively managed mutual funds that couldn’t match the market return over the long term. Remember this, when you buy a high-flying stock, you are buying high. When the stock crashes and you panic and sell, you are selling low. This is exactly the opposite of buy low, sell high because our emotions get the better of us. I will stick to my diversified portfolio with an eye towards long term returns and an appropriate balance of risks vs. returns.
Very cool looking site. I’ve been trading on a stock market simulation site called Wall Street Survivor (www.wallstreetsurvivor.com for those who are interested).
These sites are useful insofar as they provide a community of traders to Q&A with, and it also always you to pratice trading without risk real $$$ (in the case of wall street survivor). Does anyone know if Cake Financial offers a stock simulator?
@ MikeT - completely right.
@ Lynx - no, MikeT understands finance. You do not.
Very few people can conistently beat the market. Buy an index fund or get rich enough so you can invest in hedge funds.
Tracking the Top 5% of users may be the best way to lose money. No one will invest in such an ETF excluding a few idiots and the liability to Cake Financial for setting these up will be huge.
Good luck getting sued. Cake Financial is another lame startup focused on fixing a problem that doesn’t exist.
@Lynx: it’s a late reply, but I’ll post it here anyway.
I’ve never invested my money in the market (yet).
However, I used to be a trader in a hedge fund and had a really good chance to see how it all works. Additionally to my MBA in Finance, I read about 30 books on the market, tried to use technical analysis methods to beat the market, researched everything I could on this and made my conclusion: no one ever consistently beats the market just by investing in stocks. You may do it only if you do some kind of arbitrage (the stuff I was involved in).
Ok, I have a virtual portfolio (created on March 29, 2007; after that, I did not have any trades up until today), which beat the market by 50% sometimes. Today, Feb 26th 2008, it’s beating the market (S&P 500) by only 14%. But this does not make me feel like I’m a hero: I know very well that with time I will underperform, because everyone did sooner or later.
The top 5% people in Cake use some techniques that are good for only a certain time but probability that they will underperform is close to 100% (I will leave a small space for error; if you know statistics - you will understand what I mean). I would most definitely not follow them. With their method(-s), they caught a wave that will die soon and if you join them at the top of that wave - you will go down with them, but in your case you will just lose because you entered at the top, as opposed to them, who gained before they lose because they entered at the bottom of the wave, thus they will just get back to their original investment.
Nevertheless, if you want to have fun - this is a good form of it. It’s educational and thrilling, but please do not put all your money into it.
You’ve been warned…
Good luck!
MikeT.
Cake and its competitors have a very flimsy security story & this is their Achilles heel. Having worked for a major financial institution testing such applications with consumers, there is *no way* the mass market will trust “Cake Financial” with their login credentials to their brokerage accounts! Their supposed “insurance policy is a joke:
“Insurance Limitations. Cake maintains an insurance policy covering theft of data, in an amount of $2,000,000 in the aggregate among all users. Losses incurred by users will only be reimbursed to the extent Cake’s insurance policy provides coverage for such loss within the limits of this policy.”
Also, depending on TrustE as a security story is incredibly naive if they’re thinking TrustE is respected among financial institutions, much less consumers (who have almost zero brand recognition of TrustE).